Home insurance jargon explained

14 June 2016
| Tags: Insurance

It's important that you fully understand any insurance policy you buy. But if you've ever tried to read through a policy document, you'll know that a lot of terms crop up that aren't always that easy to interpret.

We've pulled together some of the most common
home insurance
phrases below and provided straightforward definitions to help you get to grips with your policy. By the end you should be able to tell your claims from your contents and your perils from your premiums!

If you can think of anything we've missed off, why not tweet us at
@tsb
and let us know.

Bear in mind that insurers do sometimes define terms slightly differently from each other - and this list isn't exhaustive - so you should always check the definitions specific to your policy to be sure you fully understand your cover.

Accidental damage

Damage caused suddenly and unexpectedly by an outside force. Accidental damage can occur to a building (such as football breaking a window) or its contents (like a spill on a sofa or carpet). Some accidental damage cover can be included within an insurance policy but could also be made available as an
add-on
.

Amendment

A change made to a policy whilst it is
in-force
. Some insurers charge to make policy amendments. Also known as
mid-term amendment.

Add-ons

These are optional elements you can select when taking out your policy. For example,
home emergency cover
can often be purchased alongside your home insurance.

An insurance policy that covers against damage to the structure of your home and its permanent fixtures and fittings.
Buildings cover
can be taken out on its own or together with
contents cover
.

Cancellation

You can cancel an insurance policy at any time, although you may incur a charge to do so. You have a 14-day cooling-off period after taking out (or renewing) a policy, during which you are free to cancel without penalty.

Claim

When your home or its contents are damaged by something that is covered under the terms of your insurance, you make a
claim
on the policy. A claim could result in repair, replacement or reimbursement, as per the terms of your policy. If you make a claim, you may be required to pay an excess.

Contents cover

An insurance policy that provides cover against damage to or loss of items within your home, by way of an insured
peril
.
Contents cover
can be bought on its own or together with
buildings insurance
.

Excess

An excess is an amount of money you will pay towards a
claim
. For example, if you have a £100 excess, you will be required to pay the first £100 of any successful claim. Increasing your excess may reduce the
premium
you are charged.

Exclusions

A list of events that aren't covered by a policy. These are usually listed within the policy booklet provided by your insurer.

Flood Re

A scheme under which Government and insurers are working together to promote the availability and affordability of home insurance in flood risk areas. For more information, read our post
What is Flood Re and how does it work?

Home emergency cover

Commonly available as an
add-on
to your home insurance (or as a stand-alone product), this provides assistance when you have an emergency at home, with things like plumbing, heating or electrical supply.

In-force

A policy that is active.

Inception

The start of the cover provided by your insurance policy.

Insurance Premium Tax

Insurance Premium Tax (IPT) is a tax levied by the Government on general insurance premiums. For more information on IPT rates, visit
GOV.UK
.

No claim discount

Sometimes referred to as a
no claims bonus
, this is a reduction made to your premium in recognition of you not having made any claims. It is commonly measured in years. You may be required to provide evidence of your claims history to secure the reduction.

Peril

This is a term sometimes used to describe an event that may (or may not) be covered by an insurance policy. Examples include storms or floods.

Personal items

Possessions that you keep at home but take with you when you go out (such as glasses, handbags and wallets) can be insured against damage or theft with
personal items cover
. This may be included in a home insurance policy or be added separately and could be subject to
exclusions
.

Policy

Your insurance policy is the cover you have (or will) paid an insurer to provide. Your proof of cover is usually provided in the form of an insurance
schedule
and a policy booklet that details the term of the cover.

Premium

The insurance premium is the price you pay an insurer in order for them to provide cover. Insurance is typically bought on an annual basis, so the premium can be paid for a year or in instalments.

Price comparison website

A price comparison website (PCW) allows a user to complete one insurance application and receive quotes from multiple insurers. You should always check that the level of cover is right for you and remember that not all insurers are listed on PCWs.

Quote

After completing an insurance application, the premium price offered is known as a quote. You are under no obligation to accept a
quote
and you are free to get quotes from as many insurers or
price comparison websites
as you wish. Quotes are valid for a set period of time - often 30 days.

Rebuild cost

When applying for home insurance (or stand-alone
buildings cover
) you may be required to provide a rebuild cost for your home. This is not the market value of your house or the price you paid but rather the cost to build it from scratch were it to be destroyed. The Association of British Insurers has a
rebuild cost calculator
on their website to help work this out.

Renewal

This is the extension of a policy beyond its original end date. A policy renewal will add an extra year to the policy terms. If you've agreed to it, an insurance policy may renew automatically. You can prevent this by informing your insurer in advance of your renewal date, or you can cancel without penalty up to 14 days after the renewal date.

Schedule

Your policy schedule will detail the specifics of your cover, including the start and end dates, cover limits, premiums, discount details and which sections of the policy booklet apply to your policy.

Settlement

A reference to settlement is usually the offer from an insurer in respect of a policy holder's claim. But in
buildings cover
it's also a term referring to the downward movement of land beneath a building due to the weight of the building.

Sum insured

Usually shown on your
schedule
, this value is the most an insurer will pay out for a claim from any one incident. You should review this value regularly to ensure it continues to meet your needs.

Underwriter

An insurance underwriter sets the terms under which insurance will be offered by a company.

We (or us)

Where you see
we
or
us
in your policy booklet it will refer to the insurer.

Wear and tear

Where
buildings cover
is concerned, a policy usually excludes damage that happens gradually over time, known as "wear and tear". In
contents insurance
, a claim may include a deduction for wear and tear based on the age and use of the item.

You

Where you see
you
mentioned in your policy booklet, it means the person who has bought the cover. You may also be referred to as a
policyholder
or the
insured party
.

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